Website design By BotEap.comWith many companies today struggling to become more globally competitive and meet consumer demands for lower prices, many methods of reaching global markets and joint ventures with foreign companies seem increasingly attractive. One of the options available to product manufacturers is contract manufacturing with foreign producers. Like licensing, contract manufacturing involves a foreign company producing goods for another company. However, where licensing involves the manufacturer using the company’s trademark or brand name under license and the sale of consulting services by the licensor, contract manufacturing involves a company that already produces a own brand product and another company that attaches its brand name or trademark.

Website design By BotEap.comIn contract manufacturing, the manufacturer has no rights to the trademark. Contract manufacturing is often a form of offshore outsourcing in which a company produces a product for a specific brand. Examples of this can be seen in several large American corporations. Singapore contract manufacturers often produce mobile phones and other electronics for various US brands, and China is a leading contract manufacturer of US computers and laptops such as Dell.

Website design By BotEap.comThe benefits of contract manufacturing for startups or smaller businesses can be great, as contract manufacturing often allows them to experiment with different product variations in different markets without having the high production costs associated with a local manufacturing facility. . Additionally, for established businesses, the production of successful products can be easily expanded to meet new demands without incurring additional cost and overhead.

Website design By BotEap.comIn addition to contract manufacturing, forming international joint ventures and strategic alliances are also great ways to expand into the global market. However, these types of joint ventures have traditionally been more used by larger corporations. A joint venture is a type of agreement where two companies come together for a particular project. Examples of this are often seen in the automobile industry, where American auto companies form a joint venture with Asian automakers to produce vehicles for all markets. The two companies, often from two different countries, share technology and risks associated with the project, along with marketing and management skills.

Website design By BotEap.comThe advantage of these types of companies is that many companies that would not otherwise be able to enter some markets can work together with local companies that have access to those markets. A strategic alliance is almost the same, uniting two or more companies with a common goal. However, in a strategic alliance, the companies do not normally share costs, administration or profits. While these types of agreements can be beneficial in reaching other markets, the disadvantages are much the same as a licensing agreement, where one company can take another company’s technology and expertise, abandon the agreement, and use the ideas to promote your own company or its benefits. .